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TechnologyOne (ASX:TNE) share price jumps after strong FY22 result

The TechnologyOne Ltd (ASX: TNE) share price has jumped 5% after the company reported its FY22 result.

This ASX tech share provides enterprise software for larger organisations.

FY22 result

TechnologyOne revealed its numbers for the year ending 30 September 2022 compared to FY21.

  • Total revenue increased by 18% to $369.4 million
  • Software as a service (SaaS) annual recurring revenue (ARR) rose 43% to $274.2 million
  • Net profit before tax grew 15% to $112.3 million
  • Net profit after tax grew 22% to $88.8 million
  • Cash flow generated up 21% to $77.2 million
  • Total dividend of 17.02 cents, including a special 2 cents per share dividend, up 22%

TechnologyOne is working on delivering software to customers with access to the software from any device, at any time from anywhere in the world, as well as a simple and cost-effective way to run their enterprise.

The company now has over 800 large scale enterprise orgnisations. It continues to lead in the ‘local government’ sector, where it closed 20 major deals in FY22 with $63.9 million in total contract value. It now has more than 320 council customers in the Asia Pacific region. In the higher education sector, it closed 10 major deals in FY22 worth $47 million.

Longer-term target

The business currently has total ARR of $320.7 million, up 25%. TechnologyOne says it’s on track to surpass its target of $500 million of ARR by FY26. UK ARR growth was 95%, to $17.5 million.

ARR stands at 90% of total revenue. This means that 90% of its total revenue is locked-in at the start of the financial year, which positions it “well to achieve strong continuing growth” in the new year.

The business is looking to double in size every five years, with part of the plan being to continue investing in research and development. It invested $92.2 million in R&D in FY22, up 19.6%.

In the 2022 financial year, TechnologyOne’s profit before tax margin was 30% – it’s expecting this to improve to 35% in the coming years.

Final thoughts on the TechnologyOne share price

TechnologyOne seems to be doing all the right things to produce a good offering for customers and produce good growth for shareholders.

Over the last six months, it has gone up over 20%. It’s not a bargain today, but if it can keep growing profit at double digits over the rest of the decade then it could be very promising.

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